Amazon FBA vs FBM: Which One is Right for Your Business?

If you're selling on Amazon, you've probably come across the terms FBA and FBM. And if you're like most sellers, you're wondering which one is actually better for your business.

Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM) are two very different ways to run your store, each with its own costs, control, and advantages.

FBA offers convenience, scalability, and access to Prime customers, while FBM gives you greater control over operations and costs.

So, how do you choose between the two?

In this guide, we’ll break down the key differences between FBA and FBM, along with the pros, cons, cost factors, and common mistakes, so you can decide which fulfillment method is the best fit for your business.

What Is Amazon FBA?

Amazon FBA (Fulfillment by Amazon) is exactly what it sounds like that Amazon handles your order fulfillment.

You ship your products in bulk to Amazon’s warehouses. From there, Amazon takes care of storage, picking, packing, shipping, customer service, and even returns. Your products are also Prime-eligible, which can seriously boost sales.

It’s a plug-and-play system that helps sellers scale fast, especially if you don’t want to deal with logistics.

Key Features of FBA:

• Amazon handles shipping, storage, and returns
• Products are Prime-eligible
• Access to Amazon’s customer service team
• Pay per unit for storage and fulfillment

What Is Amazon FBM?

FBM (Fulfillment by Merchant) means you list your products on Amazon, but you manage the shipping, storage, and customer service yourself or through your own fulfillment partner.

This gives you more control over operations, packaging, and margins. But it also means more responsibility.

It’s ideal for sellers who already have their own logistics setup or want to retain brand control.

Key Features of FBM:

• You handle storage, packing, shipping, and returns
• Greater control over inventory and packaging
• Lower fulfillment fees, but higher operational effort
• No Prime badge unless using Seller Fulfilled Prime (SFP)

Key Differences Between FBA and FBM

Here’s a quick side-by-side comparison:

Pros and Cons of Amazon FBA

It’s worth weighing the benefits of Amazon FBA against the limitations, especially if you're operating on tight margins or have unique packaging needs.

Pros of Amazon FBA

• Prime Eligibility = More Sales: Products fulfilled by Amazon are automatically eligible for Prime, which can dramatically boost visibility and conversions. Shoppers trust fast, free shipping and that trust often turns into more purchases.

• Hands-Off Fulfillment: No need to manage warehouses, staff, or shipping logistics. Just send your products to Amazon and let them take it from there.

• Scalable Operations: Whether you're getting 10 orders a day or 1,000, Amazon can handle it. FBA makes it easier to grow without worrying about fulfillment bottlenecks.

• Customer Service & Returns Handled: Amazon takes care of customer inquiries, returns, and refunds, saving you hours of back-and-forth with buyers.

• Storage in Strategic Locations: Amazon stores your products in its fulfillment centers across the country, speeding up delivery and reducing shipping costs for customers.

Cons of Amazon FBA

• High Fees Can Cut Into Margins: Between storage, fulfillment, and optional services, the costs can stack up, especially if your products are bulky, heavy, or slow-moving.

• Less Control Over Customer Experience: You can’t customize packaging, inserts, or shipping options. Amazon owns the delivery experience, not you.

• Risk of Long-Term Storage Fees: If your inventory sits too long in Amazon’s warehouse, you’ll be hit with extra charges. It’s a problem if you miscalculate demand or overstock.

• Complex Requirements: FBA has strict labeling and prep rules. Miss them, and your inventory might be delayed or even rejected.

• Returns Can Be Costly: While Amazon makes returns easy for customers, it’s not always cheap for sellers. Returned items may be unsellable, and restocking fees don’t always cover the loss.

Pros and Cons of Amazon FBM

Let’s walk through the biggest upsides and potential drawbacks of using Amazon FBM.

Pros of Amazon FBM

• Greater Control Over Fulfillment: You choose how and where your inventory is stored, how it’s packed, and which carrier ships it. This flexibility is perfect if you want to offer branded packaging or handle things your way.

• Lower Fees: No FBA storage or fulfillment fees means you keep more of your profit, especially on large, heavy, or slow-selling items.

• Better for Custom or Made-to-Order Products: If your products require customization, personalization, or are made in small batches, FBM is often the better fit.

• Easier Inventory Consolidation: If you sell on multiple platforms (like Shopify or Etsy), FBM allows you to manage all your inventory from one place without splitting it across Amazon warehouses.

• No Surprise Storage Charges: Since you're managing storage, you won’t get hit with long-term or unexpected warehousing fees from Amazon.

Cons of Amazon FBM

• No Prime Badge (Unless Using SFP): Most FBM listings aren’t Prime-eligible, which can affect your visibility and sales, especially with Prime customers.

• You Handle Shipping & Returns: From packing boxes to dealing with lost shipments and customer complaints, it’s all on you or your 3PL partner.

• Slower Shipping = Lower Conversions: If your shipping speed doesn’t compete with Prime, you could lose out to FBA sellers offering faster delivery.

• Customer Service Load: You’re on the hook for handling inquiries, returns, and refunds. Poor service can impact your seller rating.

• Scaling Can Get Tricky: As order volume grows, managing fulfillment in-house can become overwhelming unless you have solid systems or a reliable fulfillment partner.

FBA vs FBM: Which Is More Profitable?

Profitability isn’t just about who has lower fees, it’s about the full picture like product type, order volume, shipping costs, storage, and your ability to scale.

Let’s break it down:

FBA Is More Profitable When

• You're selling fast-moving, small-to-medium-sized items: The Prime badge drives higher conversion rates, and Amazon’s fulfillment efficiency makes it easy to handle volume.

• You want to save time and scale faster: If your focus is growth and not managing day-to-day operations, FBA helps you stay lean and hands-off.

• You can absorb the fees or factor them into your pricing: Many successful sellers simply build FBA fees into their margins and still stay competitive.

FBM Is More Profitable When

• You sell slow-moving, oversized, or high-margin items: These kinds of products can rack up high storage and fulfillment fees in FBA. FBM gives you cost control.

• You already have a fulfillment setup or use a 3PL: If you’ve got a warehouse or use a partner with competitive rates, FBM may reduce your per-order costs.

• You want tighter control over costs and customer experience: Avoid FBA’s surprises, such as returns that hit your margins or long-term storage fees, by handling fulfillment on your terms.

An Example:

Which Fulfillment Method Is Best for Your Business Type?

Selecting between FBA and FBM depends on how your business operates and what you're optimizing for such as time, cost, control, or customer experience. Here’s a breakdown by business type:

Common Mistakes to Avoid When Choosing FBA or FBM

• Underestimating FBA Fees: Many sellers forget to factor in storage, fulfillment, and return fees, only to realize their margins are tighter than expected.
• Choosing FBM Without Operational Readiness: Without a clear shipping and returns process, FBM can lead to delays, bad reviews, and lost customers.
• Ignoring Prime Eligibility: Going FBM means missing out on Prime by default, which can lower your visibility and conversion rate.
• Using a One-Size-Fits-All Approach: Some items are better suited for FBA, others for FBM. A one-size-fits-all approach can limit profitability.
• Overstocking in FBA: Sending too much to Amazon can trigger long-term storage fees, especially if your products don’t move quickly.

Conclusion

There’s no one-size-fits-all answer here and that’s okay.

FBA is great if you want to save time and scale quickly without dealing with packing and shipping.

FBM, on the other hand, gives you more control and can help you keep costs low if you already have a system in place.

The truth?

A lot of sellers don’t stick to just one.

They use FBA for their bestsellers and FBM for bulkier or custom products.

What matters most is understanding your products, your margins, and what kind of experience you want to offer your customers.

Start with what makes the most sense for your business and adjust as you grow.

FAQS

Which is better FBA or FBM?

FBA is better for fast growth and convenience. FBM offers more control and lower costs. The better option depends on your business goals and product type.

Is Amazon FBM more profitable?

FBM can be more profitable for high-margin, bulky, or slow-moving products. But for fast sellers, FBA often drives more sales despite higher fees.

What is the cost difference between FBA and FBM?

FBA includes storage, fulfillment, and return fees. FBM avoids these but adds your own shipping and handling costs. Actual savings depend on product size, volume, and fulfillment setup.

How to switch from FBM to FBA?

You can switch by converting your listing in Seller Central to FBA, sending inventory to Amazon, and updating SKUs with fulfillment settings, then Amazon handles the rest.

‍